Competition authorities around the world must work together to meet significant and evolving challenges in global markets, and consider whether traditional approaches to assessing mergers remained fit for purpose, ACCC Chair Rod Sims said tonight.
Mr Sims, speaking at a gala dinner in Melbourne for the International Competition Network’s merger workshop, said the meteoric expansion of large digital platforms, much driven by acquisitions, was one of many challenges confronting global competition authorities.
The ICN merger workshop is held every one to two years and brings together representatives from competition authorities from around the world. The ACCC is hosting this year’s event in Melbourne, which is framed around of the question of “how to achieve the right balance to merger review in a changing market environment?”
“Recently, competition authorities around the world have been heavily challenged on whether our merger laws, and our application of those laws, is adequately achieving its goals,” Mr Sims said.
“Some argue that high levels of concentration, and the resulting excessive profits, are responsible for reduced investment and innovation, growing inequality and, according to some, an undermining of democracy.”
“These are questions that go not only to the health of the economy but also to the type of society that we want. While merger policy is not intended to solve for all these issues, the fact that they are raised suggests that the stakes are high,” Mr Sims said.
“The evidence of whether our economies are too concentrated, and the consequences of this, can be seen as mixed. My judgement is that Australia’s economy is too concentrated.”
Mr Sims noted that proposed mergers were often difficult for competition authorities to challenge, because such cases involved predicting the future state of competition with the merger.
Pointing to previous decisions of the Federal Court of Australia and the Australian Competition Tribunal, Mr Sims said the weight given to the testimony of merger parties’ senior executives by the Court and Tribunal posed an additional challenge for the ACCC.
“My sense is that courts in some other jurisdictions are more sceptical of self-serving testimony by the merger parties,” Mr Sims said.
“This applies to all merger reviews but is even greater when the market environment is rapidly evolving and incumbents are acquiring emerging and innovative new players.”
Competition authorities could help each other on these challenges, Mr Sims said, particularly in matters involving global firms with complex and far reaching operations.
“Google’s acquisition of Fitbit, which some authorities are currently considering, is a key example where we will all want to watch and learn from each other and we are seeing clear signs of that already. It is a very important matter,” Mr Sims said.
Close engagement had benefited the ACCC when it considered multijurisdictional mergers, Mr Sims said.
“Importantly, it is also helping us now in looking at our own merger regime and asking if it remains fit for purpose.”
A copy of the speech is available at Address to the International Competition Network Merger Workshop 2020.
About 220 delegates from 45 countries are attending the ICN merger workshop in Melbourne, including Isabelle de Silva, President of the French Competition Authority, who delivered this year’s annual Bannerman Competition Lecture on Tuesday.
Also this week, the ACCC and representatives from the US Federal Trade Commission and the Philippine Competition Commission delivered a Merger Review in ASEAN workshop for competition authority representatives from Cambodia, Laos, Myanmar, the Philippines, Thailand and Vietnam.
“This workshop reflects the ACCC’s commitment to supporting a strong and competitive region through cooperation and capacity building with our ASEAN counterparts,” Mr Sims said.